B&G Foods creates 4 business units to oversee sprawling portfolio

Dive Brief:

  • B&G Foods is creating four different business units later this year to improve focus and drive growth. The business units are: specialty; frozen and vegetables; meals; and spices and seasonings. Each unit will have its own president.
  • The manufacturer behind brands such as Ortega, Green Giant and Crisco, said the new structure also will push accountability and improve the speed and clarity of decision-making to deliver growth and financial performance for B&G’s complex portfolio.
  • As CPGs wrestle with challenges like inflation and supply chain headaches, B&G and other companies are restructuring to help them better reevaluate their portfolios and establish what products will be their biggest priority going forward.

Dive Insight:

B&G Foods has had reason to question its business structure and find a new solution. In March 2021, the company’s former interim CEO said in an earnings call that commodity price inflation and supply shortages caused it to miss out on sales.

In B&G Foods’ most recent earnings call last month, current President and CEO Casey Keller said the company aims for the restructuring to be cost-neutral.

“It’s largely reorganizing ourselves to kind of create multifunctional units which are driving aspects of our business and have people make decisions that are closer to the business in more real time,” Keller said.

B&G’s decision to change how its business is structured makes sense, given the wide range of food sectors that it reaches, and the large ingredient pool it sources from. The company is known for a diverse variety of food items. In nonfood, it also makes anti-static spray Static Guard.

Specialty, which includes brands like Clabber Girl and Crisco, makes up nearly a third of B&G’s net sales. Frozen and vegetables is responsible for 27%; meal products like Cream of Wheat and Victoria contribute 22%; and spices and seasonings like Ac’cent and Dash comprise 18% of the company’s sales.

In the last quarter, shortages and price increases led to the company’s earnings before interest, taxes, debt and amortization (EDITDA) to decline 16.2% versus the first quarter of 2021. It attributed the drop largely to higher costs of commodities like oil, wheat and corn stemming from the Ukraine war.

A key aspect of the reorganization concerns the potential sale of particular brands. When a company divides its portfolio into different areas, it is more likely to have a better handle on its brands and know which ones to offload. The possibility that B&G could actively sell some of its brands would mark a dramatic shift for the company that has a reputation for being a serial acquirer. One of the few sales made by B&G in recent years was in 2018 when it divested Pirate Brands, the maker of Pirate’s Booty, to Hershey for $420 million.

“These units will define the categories and brands that we will resource and grow, the platforms for future acquisitions, the brands that will run for efficiency and cash flow, and the businesses we may exit over time,” Keller said in the press release.

Food and beverage companies restructuring their business or portfolios has become more common as consumer interests change and the business environment becomes more complicated. This week Kellogg announced plans to split into three separate companies: cereal, snacks and plant-based foods.